SGER: Commitment Devices and Savings Behavior: A Pilot Experiment in the Philippines

Princeton University, Princeton NJ

Investigators

Abstract

Savings allows households to smooth consumption and make investments. Savings also helps stabilize banking markets and fuel economic growth. Yet much remains unknown about the determinants of savings, particularly in developing countries. Are low savings a consequence of low access to safe, affordable savings product, or do households also need mechanisms designed specifically to help them commit to save? We are working with a rural bank in the Philippines to offer market-driven innovative savings devices with commitment features. The project employs a rigorous experimental research design, with random assignment to treatment and control groups, in order to draw robust policy conclusions about the potential implications for expansion of these client-responsive products on overall economic outcomes for poor, rural Filipinos. We will collect a full set of outcome variables so that we can measure not only changes in savings at the rural bank, but changes in aggregate household savings in both formal and informal vehicles. Furthermore, we will collect consumption and investment data so that we can observe how additional savings were or were not used, and lastly we will conduct in depth analysis of who decides to take-up the commitment savings products so that we can try to disentangle competing theories of savings behavior.